Capital Product Partners L.P. Announces Second Quarter 2014 Financial Results and Charter Renewal for M/T 'Axios'
The Partnership's net income for the quarter ended
Operating surplus for the quarter ended
Revenues for the second quarter of 2014 were
Total expenses for the second quarter of 2014 were
Total other expense, net for the second quarter of 2014 amounted to
As of
As of
Fleet Developments
The M/T Axios (47,782 dwt, IMO II/III Chemical Product Tanker built 2007, Hyundai Mipo Dockyard Company, Ltd.,
In addition, our Sponsor has agreed, subject to the satisfaction or waiver of various conditions precedent, to contribute three 9,160 TEU eco-flex containerships and two eco medium range product tankers upon delivery to the Sponsor at prices below current market value, as well provide the Partnership with a right of first refusal over six additional eco medium range product tankers when delivered, in exchange for amending the target distributions to holders of Incentive Distribution Rights and an aggregate of
The amendment, which is a condition precedent to the transaction referenced above, is subject to the satisfaction or waiver of various conditions precedent, including unitholder approval at the Annual General Meeting of the Partnership, scheduled for
The transaction was unanimously recommended by the conflicts committee of our Board of Directors and unanimously approved by our Board of Directors.
Market Commentary
Product tanker spot earnings remained at subdued levels in the second quarter of 2014, as the spot market in the Western hemisphere was under pressure due to the prolonged refinery maintenance period in the U.S. Gulf and the lack of arbitrage opportunities, which limited petroleum product movements.
The product tanker period market remained active during the quarter, but rates modestly declined in response to the softer spot market.
On the supply side, the ordering activity for MR tankers slowed significantly during the first two quarters of 2014, as most quality shipyards have now exhausted their capacity through 2016. Analysts expect that net fleet growth for product tankers for 2014 will be in the region of 3.5%, while overall demand for product tankers for the year is estimated to grow at 5%.
Suezmax spot earnings weakened compared to the previous quarter but were at considerably stronger levels than in the second quarter of 2013. Refinery maintenance in
As a result of the improving spot market compared to a year ago, the Suezmax period market saw marginally more activity and at slightly increased rates, when compared to the same quarter last year.
On the supply side, the Suezmax orderbook is among the lowest in the industry, corresponding to 7.8% of the current fleet. Suezmax tanker demand is expected to continue growing in 2014, driven by increased crude oil shipments from the Atlantic basin to the Far East and
Quarterly Common and Class B Unit Cash Distribution
On
In addition, on
Management Commentary
Mr.
"The prospects for the product tanker market remain overall positive for 2014, as there is solid activity in the period market with rates having declined only modestly despite weaker spot rates in the first half of 2014. Demand for product tankers is expected to remain robust due to the continuous growth of U.S. exports of refined products and refinery capacity dislocation."
Conference Call and Webcast
Today,
Conference Call Details
Participants should dial into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (U.S. Toll Free Dial In), 0800 953 0329 (
A replay of the conference call will be available until
Slides and Audio Webcast
There will also be a simultaneous live webcast over the Internet, through the
Forward-Looking Statements
The statements in this press release that are not historical facts, including our expectations regarding employment of our vessels, redelivery dates and charter rates, fleet growth (including the proposed "Drop Down Transactions" with our sponsor), demand, newbuilding deliveries and slippage as well as market and charter rate expectations and expectations regarding our quarterly distributions, amortization payments, ability to pursue growth opportunities and grow our distributions and annual distribution guidance may be forward-looking statements (as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended). These forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from those expressed or implied in the forward-looking statements. Factors that could cause actual results to be
materially different include those set forth in the "Risk Factors" section of our annual report on Form 20-F filed with the
About
For more information about the Partnership, please visit our website: www.capitalpplp.com.
CPLP-F
Unaudited Condensed Consolidated Statements of Comprehensive Income | |||||||||||||||||
(In thousands of United States Dollars, except number of units and earnings per unit) | |||||||||||||||||
For the three month periods ended |
For the six month periods ended |
||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues | $ | 30,491 | $ | 27,215 | $ | 61,259 | $ | 53,726 | |||||||||
Revenues - related party | 16,953 | 14,554 | 33,632 | 28,008 | |||||||||||||
Total Revenues | 47,444 | 41,769 | 94,891 | 81,734 | |||||||||||||
Expenses: | |||||||||||||||||
Voyage expenses | 2,620 | 1,110 | 3,636 | 2,882 | |||||||||||||
Voyage expenses related party | 81 | 80 | 161 | 160 | |||||||||||||
Vessel operating expenses | 13,435 | 9,223 | 24,076 | 17,522 | |||||||||||||
Vessel operating expenses - related party | 3,346 | 4,199 | 7,532 | 8,496 | |||||||||||||
General and administrative expenses | 1,598 | 3,383 | 2,890 | 5,984 | |||||||||||||
Depreciation and amortization | 14,373 | 12,813 | 28,743 | 24,680 | |||||||||||||
Operating income | 11,991 | 10,961 | 27,853 | 22,010 | |||||||||||||
Non-operating income: | |||||||||||||||||
Gain from bargain purchase | - | - | - | 17,475 | |||||||||||||
Gain on sale of claim | - | 32,000 | - | 32,000 | |||||||||||||
Total non-operating income | - | 32,000 | - | 49,475 | |||||||||||||
Other income / (expense), net: | |||||||||||||||||
Interest expense and finance cost | (4,750 | ) | (3,642 | ) | (9,457 | ) | (7,357 | ) | |||||||||
Gain on interest rate swap agreement | - | - | - | 4 | |||||||||||||
Interest and other income | 575 | - | 662 | 200 | |||||||||||||
Total other expense, net | (4,175 | ) | (3,642 | ) | (8,795 | ) | (7,153 | ) | |||||||||
Net income | $ | 7,816 | $ | 39,319 | $ | 19,058 | $ | 64,332 | |||||||||
Preferred unit holders' interest in Partnership's net income | 3,959 | 5,270 | 8,004 | 10,540 | |||||||||||||
$ | 75 | $ | 681 | $ | 216 | $ | 1,076 | ||||||||||
Common unit holders' interest in Partnership's net income | 3,782 | 33,368 | 10,838 | 52,716 | |||||||||||||
Net income per: | |||||||||||||||||
Common units basic | $ | 0.04 | $ | 0.48 | $ | 0.12 | $ | 0.76 | |||||||||
Weighted-average units outstanding: | |||||||||||||||||
Common units basic | 88,546,754 | 68,386,078 | 88,494,025 | 68,385,001 | |||||||||||||
Net income per: | |||||||||||||||||
Common unit diluted | $ | 0.04 | $ | 0.41 | $ | 0.12 | $ | 0.70 | |||||||||
Weighted-average units outstanding: | |||||||||||||||||
Common units diluted | 88,546,754 | 94,027,631 | 88,494,025 | 89,980,394 | |||||||||||||
Comprehensive income: | |||||||||||||||||
Partnership's net income | 7,816 | 39,319 | 19,058 | 64,332 | |||||||||||||
Other Comprehensive income: | |||||||||||||||||
Unrealized gain on derivative instruments | - | - | - | 462 | |||||||||||||
Comprehensive income | $ | 7,816 | $ | 39,319 | $ | 19,058 | $ | 64,794 | |||||||||
Unaudited Condensed Consolidated Balance Sheets | ||||||
(In thousands of United States Dollars, except number of units and earnings per unit) | ||||||
Assets | ||||||
Current assets | As of 2014 |
As of 2013 |
||||
Cash and cash equivalents | $ | 67,705 | $ | 63,972 | ||
Trade accounts receivable, net | 2,255 | 4,365 | ||||
Due from related parties | 3 | 667 | ||||
Above market acquired charters | - | 612 | ||||
Prepayments and other assets | 1,603 | 1,376 | ||||
Inventories | 3,605 | 2,740 | ||||
Total current assets | 75,171 | 73,732 | ||||
Fixed assets | ||||||
Vessels, net | 1,148,531 | 1,176,819 | ||||
Total fixed assets | 1,148,531 | 1,176,819 | ||||
Other non-current assets | ||||||
Above market acquired charters | 123,139 | 130,770 | ||||
Deferred charges, net | 4,783 | 5,451 | ||||
Restricted cash | 15,000 | 15,000 | ||||
Total non-current assets | 1,291,453 | 1,328,040 | ||||
Total assets | 1,366,624 | $ | 1,401,772 | |||
Liabilities and Partners' Capital | ||||||
Current liabilities | ||||||
Current portion of long-term debt | $ | 5,400 | $ | 5,400 | ||
Trade accounts payable | 8,861 | 7,519 | ||||
Due to related parties | 7,319 | 13,686 | ||||
Accrued liabilities | 5,472 | 5,387 | ||||
Deferred revenue, current | 9,500 | 6,936 | ||||
Total current liabilities | 36,552 | 38,928 | ||||
Long-term liabilities | ||||||
Long-term debt | 575,215 | 577,915 | ||||
Deferred revenue | 4,409 | 3,503 | ||||
Total long-term liabilities | 579,624 | 581,418 | ||||
Total liabilities | 616,176 | 620,346 | ||||
Commitments and contingencies | ||||||
Partners' capital | 750,448 | 781,426 | ||||
Total liabilities and partners' capital | 1,366,624 | $ | 1,401,772 | |||
Unaudited Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands of United States Dollars) | ||||||||
For the six month periods ended |
||||||||
2014 | 2013 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 19,058 | $ | 64,332 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Vessel depreciation and amortization | 28,743 | 24,680 | ||||||
Gain from bargain purchase | - | (17,475 | ) | |||||
Amortization of deferred charges | 301 | 98 | ||||||
Gain on interest rate swap agreements | - | (4 | ) | |||||
Amortization of above market acquired charters | 8,243 | 5,579 | ||||||
Equity compensation expense | - | 2,739 | ||||||
Changes in operating assets and liabilities: | ||||||||
Trade accounts receivable | 2,110 | (553 | ) | |||||
Prepayments and other assets | (227 | ) | (60 | ) | ||||
Inventories | (865 | ) | (83 | ) | ||||
Trade accounts payable | 1,665 | 431 | ||||||
Due from related parties | 664 | - | ||||||
Due to related parties | (6,367 | ) | 3,615 | |||||
Accrued liabilities | 14 | 788 | ||||||
Deferred revenue | 3,577 | (3,429 | ) | |||||
Dry-docking costs paid | (323 | ) | (196 | ) | ||||
Net cash provided by operating activities | 56,593 | 80,462 | ||||||
Cash flows from investing activities: | ||||||||
Vessel acquisitions and improvements | (112 | ) | (130,000 | ) | ||||
Increase in restricted cash | - | (3,000 | ) | |||||
Net cash used in investing activities | (112 | ) | (133,000 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of Partnership units | - | 75,075 | ||||||
Expenses paid for issuance of Partnership units | - | (2,568 | ) | |||||
Proceeds from issuance of long-term debt | - | 54,000 | ||||||
Loan issuance costs | (12 | ) | (11 | ) | ||||
Payments of long-term debt | (2,700 | ) | (1,350 | ) | ||||
Dividends paid | (50,036 | ) | (41,511 | ) | ||||
Net cash (used in) / provided by financing activities | (52,748 | ) | 83,635 | |||||
Net increase in cash and cash equivalents | 3,733 | 31,097 | ||||||
Cash and cash equivalents at beginning of period | 63,972 | 43,551 | ||||||
Cash and cash equivalents at end of period | 67,705 | 74,648 | ||||||
Supplemental cash flow information | ||||||||
Cash paid for interest | $ | 8,243 | $ | 7,021 | ||||
Non-Cash Investing and Financing Activities | ||||||||
Private placement costs relating to Class B preferred units included in liabilities | $ | - | $ | (28 | ) | |||
Capitalised and dry-docking vessel costs included in liabilities | $ | 71 | $ | 321 | ||||
Appendix A - Reconciliation of Non-GAAP Financial Measure
(In thousands of U.S. dollars)
Description of Non-GAAP Financial Measure - Operating Surplus
Operating Surplus represents net income adjusted for non-cash items such as depreciation and amortization expense and deferred revenue. Operating Surplus is a quantitative standard used in the publicly-traded partnership investment community to assist in evaluating a partnership's ability to make quarterly cash distributions. Operating Surplus is a non-GAAP financial measure and should not be considered as an alternative to net income or any other indicator of the Partnership's performance required by accounting principles generally accepted in
Reconciliation of Non-GAAP Financial Measure - Operating Surplus |
For the three-month period ended |
|||
Net income | $ | 7,816 | ||
Adjustments to reconcile net income to net cash provided by operating activities | ||||
Depreciation and amortization | 14,579 | |||
Deferred revenue | 4,457 | |||
OPERATING SURPLUS PRIOR TO CLASS B PREFERRED UNITS DISTRIBUTION | 26,852 | |||
Class B preferred units distribution | (3,970 | ) | ||
ADJUSTED OPERATING SURPLUS | 22,882 | |||
Increase in recommended reserves | (1,828 | ) | ||
AVAILABLE CASH | 21,054 | |||
Contact Details:
CEO and CFO
+30 (210) 4584 950
E-mail: i.lazaridis@capitalpplp.com
Finance Director
+30 (210) 4584 950
E-mail: j.kalogiratos@capitalpplp.com
Investor Relations / Media
Tel. +1-212-661-7566
E-mail: cplp@capitallink.com
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